'ADP just served as a reminder of America's rosier fundamentals, something that has been pushed off to the side with Washington dominating the spotlight.' – Western Union Business Solutions (based on Business Recorder)

Pair's Outlook

Despite a strong US ADP Employment Change reading on Wednesday, the Sterling still outperformed the US Dollar, successfully climbing over the 1.26 major level. Resistance was encountered only around 1.2675, where the 23.60% Fibo and the weekly R1 rest. This group of levels keeps providing relatively strong resistance today, which is likely to cause the Cable to undergo a small bearish correction—what usually occurs ahead of the Friday's NFP data if the figures are anticipated to disappoint. As a result, the GBP/USD pair is expected to slide back down towards the 1.26 mark.

Traders' Sentiment

Although not as strong as yesterday, but market sentiment remains bullish at 59% (previously 63%). At the same time, the portion of orders to acquire the Pound inched down from 56 to 55%.

'Fears about [the dollar's] downside continue to smolder.' – Mizuho Bank (based on Market Watch)

Pair's Outlook

The USD/JPY currency pair behaved in accordance with expectations yesterday, having bounced back from the 112.60 psychological support level. However, the pair was unable to retain its positions above the weekly S1, with trade closing at 113.26. Today technical indicators suggest the US Dollar is to edge lower, but the 112.60 mark is still expected to remain intact. A breach, however, would only spark more bearish momentum in the medium term, with the 110.00 mark becoming the next main target. Any positive developments are likely to be capped around 114.50, where the weekly and the monthly PPs, as well as the 20 and the 55-day SMAs are located at.

Traders' Sentiment

Traders' sentiment remains bullish at 53%, but the share of purchase orders is slightly lower, namely at 56%, compared to 59% yesterday.

'We are sort of eyeing the $1,225 levels in the next move if the metal breaks the recent highs of around $1,215.' – Spencer Campbell, Kaloti Precious Metals (based on Reuters)

Pair's Outlook

During the early hours of Thursday's trading session the yellow metal surged and broke through the first weekly resistance level, which is located at 1,213.16. Due to that the metal has a free path up to the 1,219.20 mark, where the 38.20% Fibonacci retracement level is located at. However, that will be a hard resistance to break, as the Fibo is also supported by the upper Bollinger band at 1,219.89 and the 100-day SMA at 1,221.72. Although, if the resistance cluster would be broken, the bullion might jump above 1,235 level.

Traders' Sentiment

Traders remain almost neutral, as 51% of trader open positions are long on Thursday. In the meantime, 59% of trader set up orders are to buy gold.

EURGBP is making a perfect reversal lower from our resistance area, marked with yellow box. It was a textbook bearish reaction which is looking very strong based on personality, so it's probably an impulse that is headed beneath 0.8468 low. Broken channel also confirms a completion of a corrective wave up at 0.8634.

EURGBP, 1H

EUR/USD

Current level - 10779

Yesterday's pullback to 1.0740 support zone was corrective and the outlook here remains bullish, for a rise towards 1.0870 area. 

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 112.82

The bias is negative after yesterday's failure below 114.00 resistance, for a slide towards 111.40 area. Crucial on the upside is still 114.00.

GBP/USD

Current level - 1.2662

The uptrend is intact, heading towards 1.2770 resistance area. Crucial on the downside is 1.2608 low.

'With cost pressures increasingly feeding though to higher selling prices at factories, it looks inevitable that consumer price inflation will rise further in coming months'. -Rob Dobson, IHS Markit

British manufacturing activity fell during the first month of 2017, as the weak British Pound pushed the prices of imports sharply higher, a private survey revealed on Tuesday. Markit/CIPS said its Purchasing Managers' Index dropped to 55.9 points in January after hitting its two-and-a-half year high of 56.1 in December. However, the figure came out in line with market analysts' expectations and remained above the 50-point level separating expansion from contraction for the sixth straight month. Data showed the weaker Sterling boosted new export orders but also drove acceleration of manufacturers' input cost inflation. However, analysts suggest that the positive effects of the weak Sterling on British exports could actually come to an end in the upcoming months. Back in January, factory prices reached their highest level since 1992, when the first Markit PMI survey for the UK manufacturing sector was published. Last month, consumer price inflation hit its two-and-a-half year high of 1.6%, remaining just 0.4% below the Bank of England's inflationary target. Wednesday's survey suggests that the manufacturing sector is likely to make a positive contribution to the country's economic growth in the first quarter of 2017. After the release, the Pound touched its six-day high of 1.2614 against the US Dollar.

'The PMI, New Orders, and Production Indexes all registered their highest levels since November of 2014, and comments from the panel are generally positive regarding demand levels and business conditions'. -Bradley Holcomb, ISM

US private companies created far more jobs than expected in January, data published on Wednesday showed. The ADP National Employment Report, a jobs survey released two days before the official Bureau of Labor Statistics government report, revealed that the US private sector saw an increase of 246,000 jobs last month, surpassing markedly analysts' expectations for 165,000. Meanwhile, the December figure of 153,000 was revised slightly down to 151,000. Analysts widely expect the NFP report to show on Friday a 170,000 jobs gain for January, while the unemployment rate is forecast to remain unchanged at 4.7%. Separately, the Institute of Supply Management reported its Purchasing Managers' Index advanced to 56.0 in January, up from the preceding month's reading of 54.5 and surpassing analysts' expectations for 55.0 points. Any reading above the 50 point level indicates expansion in the manufacturing sector. Furthermore, the New Orders Index and Employment Index advanced to 60.4 and 56.1 in the reported month, respectively. Meanwhile, the Price Paid Index rose to 69.0 for the eleventh consecutive month in January, compared with 65.5 previously. The number slightly topped economists' forecasts for an increase to 66.0.

'A record trade surplus shows that the surge in commodity prices is boosting nominal GDP. The most recent increases in the volume of exports implies that real GDP in the fourth quarter of last year at least may prove to be a bit stronger than we had thought'. -Paul Dales, Capital Economics

The number of Australian building approvals dropped in December after rising markedly in the preceding month, official data showed on Thursday. The Australian Bureau of Statistics reported building approvals fell 1.2% on a monthly basis in December, following November's upwardly revised jump of 7.5%. Nonetheless, the December figure was better than analysts' expectations of a 1.7% drop. On an annual basis, Australian building approvals decreased 11.4%. House building permits declined 1.6% month-over-month, whereas other dwelling approvals climbed 0.9%. The Australian construction sector is beginning to fade. However, so far it has experienced a rather slow decline in activity. In 2017, the construction sector is likely to see a rise of 212,000 new dwellings, according to the latest forecasts released by Commonwealth Bank of Australia. Meanwhile, the average house price is expected to grow just 5% in 2017 amid slow household income growth. Separately, the Australian Bureau of Statistics said the country's trade surplus hit A$3.51 billion in December, compared to the prior month's upwardly revised surplus of A$2.04 billion, while economists anticipated a decline to A$2.00 billion. As a result, the Kiwi rose to 76.30 against the Greenback, up from 76.00 seen ahead of the release.

The Aussie rallied on upbeat Australian data and being also boosted by weaker US dollar.

The pair broke firmly above former congestion tops and also took out Fibo barrier at 0.7630. Bulls are looking for the upper Bollinger band at 0.7690 that may temporarily cap gains as daily studies are overbought.

Hourly trough at 0.7633 marks initial support ahead of former congestion tops at 0.7600 zone and rising daily 10SMA at 0.7573 that is holding today’s action.

Strong bullish setup of daily studies, with multiple MA’s bull-crosses, strongly underpins for further bullish extension.

Break above 0.7690 barrier could extend towards 0.7758/0.7776 (11 Aug / 08 Nov 2016 highs).

US NFP data are in focus.

Res: 0.7690, 0.7758, 0.7776, 0.7833
Sup: 0.7633, 0.7600, 0.7575, 0.7549

The pair remains biased lower despite repeated failure to close below strong support at 112.50 that was cracked on Tuesday. Near-term action remains capped by daily Tenkan-sen (113.71) that maintains downside pressure. Bearish daily studies favor renewed probe below 112.50 for retest of next pivot at 112.00 zone (Fibo 38.2% of 101.17/118.65 upleg), break of which would signal fresh bearish acceleration. Conversely, lift above daily Tenkan-sen pivot 113.71) and past two days highs at 113.94, would ease persisting bearish pressure and signal prolonged directionless trading within 112.50/115.60 range. Daily Kijun-sen (115.33) marks next upper pivot, along with daily cloud top at 116.10. Tomorrow's US NFP data are expected to give more clues about pair's near-term direction.

Res: 113.34, 113.71, 113.94, 114.56
Sup: 112.50, 111.97, 111.34, 111.00